Investor Carl Icahn to Meet with Apple CEO Tim Cook on Monday, September 30

[mccldwll]

I don't mean you jumped in to ride the pump. I'm just seeing that any gains you're seeing now from Carl Icahn's interest are temporary, and long term, he's going to be bad for your investment.

You don't seem to realize that AAPL was @$470 when Icahn announced his holdings. There is no pump.

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I know that where Carl Icahn goes, companies are hurt if not destroyed, he gets lots of cash out of it and it's a crapshoot about how well anyone outside of his circle does.

You only think that. You certainly don't know something that's not true.

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I've also heard that a buyback is a good way to get around taxes in some way, but I forget why.

No comment.

 

[mccldwll]

Icahn is like wolves, and he smells blood from a wounded prey, Apple.

He was just done with another wounded prey, Dell.

as predicted, after SJ, growth will be stagnant with the current size of apple. there are more chances for stock to go down than up, as mobile market is starting to mature and saturate. Where to innovate from here? TV?

A FauxNews report?

 

[wikiverse]

Icahn is a stockholder, and like all stockholders he is legally a partial owner of the company. Stockholders in the aggregate are Tim's boss. Insofar as Icahn's interests are in line with other stockholder's interests, such as wanting for Apple to pay out their unused mountain of cash, Apple should be listening to him very carefully, and doing the best they can for their owners.

That isn't the whole story.

Currently Icahn only owns a small percentage of Apple stock and has very little influence over the company.

But if Apple buys back their own stock, it becomes a non-voting share which means that Ichan's small percentage of voting shares suddenly become much more powerful and he can, therefore, be much more influential over the business.

How influential? Well, he could influence who is on the Apple board - possibly even arranging a chair for himself if he purchased more stock and Apple bought back enough - which would ultimately give him undue power for the small amount of stock he owns. Given his current pestering of the CEO this seems likely. If he had a board position, he would likely replace a CEO that disagreed with him.

While the company is on-top, Apple might be able to shut down Icahn and others because they're making money. But that won't last forever. If Apple starts to slow down (which eventually they will), or the competition starts putting on pressure, the last thing Apple wants is a McKinsey influenced leech calling the shots.

 

[mccldwll]

They're going to burst when people start moving away from the iPhone, which will happen by 2017. The iPhone as a product doesn't have more of a lifespan than 10 years. All speculation but I think very plausible. People only live in the moment, which your comments reflect.

No, just all speculation. Not very plausible at all.

 

[GadgetDon]

You only think that. You certainly don't know something that's not true.

What company ANYWHERE came out the same, much less better, once Icahn got involved?

 

[mccldwll]

I would not buy it but short it.

Go for it. Nothing I love more than a good short squeeze at the beginning of a big run up.

 

[mccldwll]

what company anywhere came out the same, much less better, once icahn got involved?

ttwo.

Hlf.

 

[IJ Reilly]

By playing like a fiddle, he knows just how to manipulate them. How to generate stories that the media will cover with his desired spin, how to hit the fear and greed points of institutional investors, etc.

A vague and generic explanation, consequently, totally unpersuasive.

The reason they'll give is to preserve assets for a large acquisition - plus much of that money was earned offshore so if brought into the country for distribution, Uncle Sam instantly grabs 35% or so even though neither the production nor the sales happened here. And those are valid reasons.

This is a terrifying reason. Large acquisitions of the kind that require the quantity of money Apple has stockpiled are almost invariably disasters. Besides, a lot of that offshore money would have to be repatriated for such a massive, theoretical acquisition, would it not? Your argument essentially cancels itself out. Fortunately, Apple has never shown any interest in huge acquisitions.

But Apple is often like the cat who sat on a hot stove once and never sat on a hot stove again - or a cold one. While Apple wasn't going bankrupt when Jobs returned, their capital fund was very low and limited their options, so Apple doesn't want to be in the same position.

FWIW, Apple was sitting on about $1B in cash in 1997, but they were burning through it at an alarming rate. This should serve as a reminder that Apple in those years was an unprofitable company, and it's an inability to fund current operations out of cash flow that require a company to burn cash reserves. No well-run company should ever get to that place.

Is Apple worried about going from massively profitable to massively unprofitable? I doubt it. In fact, the cash hoarding was clearly one of Steve's little peccadillos. Tim Cook altered that policy pretty quickly after taking over.

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That isn't the whole story.

Currently Icahn only owns a small percentage of Apple stock and has very little influence over the company.

But if Apple buys back their own stock, it becomes a non-voting share which means that Ichan's small percentage of voting shares suddenly become much more powerful and he can, therefore, be much more influential over the business.

How influential? Well, he could influence who is on the Apple board - possibly even arranging a chair for himself if he purchased more stock and Apple bought back enough - which would ultimately give him undue power for the small amount of stock he owns. Given his current pestering of the CEO this seems likely. If he had a board position, he would likely replace a CEO that disagreed with him.

While the company is on-top, Apple might be able to shut down Icahn and others because they're making money. But that won't last forever. If Apple starts to slow down (which eventually they will), or the competition starts putting on pressure, the last thing Apple wants is a McKinsey influenced leech calling the shots.

Chance=zero. All stockholders enjoy the same reverse-dilution in buybacks. If Apple somehow managed to buy back half of all its outstanding shares (nothing close is going to happen) then Icahn's holdings would "suddenly" become a whopping 1%, nowhere close to enough to influence the company as in your fantastical doomsday scenario.

FWIW, shares repurchased don't become "non-voting," they disappear entirely.

 

[Battlefield Fan]

No, just all speculation. Not very plausible at all.

Oh mky thxs for the feedback.

 

[mrxak]

As a stockholder I'm in favor of a buyback, not an increased dividend. I have no problem with Icahn or any other investor making that suggestion. The stock is undervalued, clearly, due to manipulation by so-called analysts, who among other things drove down AAPL after AAPL had a record-breaking quarter. Remember that? Apple should be buying up as much stock as they can, because Apple will continue to have increased success, and the value of the company will only rise. Apple should definitely do it now, before they introduce another new product line, and if they can pull off another low-interest borrowing scheme to do it, that's even better. Apple can later sell stock to investors at a much higher price, if they ever need to, which is better than holding onto a cash heap earning pitiful interest.

It's good for the long term health of the company. Icahn conspiracy theorists need to understand that what he's advising is good for the long term for Apple at the same time it's good short term for investors. That's win-win, in my book.

 

[IJ Reilly]

As a stockholder I'm in favor of a buyback, not an increased dividend. I have no problem with Icahn or any other investor making that suggestion. The stock is undervalued, clearly, due to manipulation by so-called analysts, who among other things drove down AAPL after AAPL had a record-breaking quarter. Remember that?

I don't rembember that, because it didn't happen. The stock was hammered because of three, straight quarters of declining earnings. That's what happens when earnings fail to grow.

 

[Bibbler]

This is all very bad news for Apple.

Icahn is bad news.

His involvement implies the beginning of the end for Apple. Just take a look at what happened with Dell.

I just don't understand Tim Cook at all.

Apple went from the industry leader to a company unable to innovate. It can't even get over its fixation on iPhone's tiny screen size.

And it went from a company that lets its stock price speak for itself, to having to rely on someone such as Icahn to cheerlead its stock. How pathetic is this? Just take a look at what happened to Dell. It is hard to believe that people like Icahn really care about Apple. More likely, they are just in it for the money. They can care less about innovative products and making changes in the quality of life of the customers. Again, it is all about the money. This whole situation with Tim Cook having to resort to talking to Icahn to cheerlead for Apple's stock price is just extremely troubling. It speaks volumes about Tim Cook's inability to lead Apple correctly.

And what is all this talk of paying out dividend? The fact that the payment of dividend is already being done now and that there are more talks of higher dividend payout by Apple is extremely, extremely, worrisome.

Payment of dividend by a company like Apple is an admission by Board and Management that Apple has transited from an innovative, growth driven company to a stagnant company relying on revenue generation rather than growth and innovation. It is an admission that Apple is unable to generate more returns using the cash for the shareholder as compared to giving the cash back to the shareholder and have the shareholder generate the returns himself.

Put it another way, if Apple is still the innovative and growth driven company like it used to be under Jobs, it would surely not payout any dividend -- no shareholders would want it to pay dividend -- because by keeping the cash within Apple and have Apple use the cash to generate returns, the shareholders are able to ensure that there is more returns that way -- since there are no other ways to generate a higher return than Apple.

By shifting to a dividend paying company, Apple is in fact admitting that it no longer has the ability to innovate and grow like it did before, and is thus not able to use the cash to generate a higher return as compared to giving the cash back to the shareholders and have the shareholders themselves generate a return by some other means.

Again, this is all very bad news.

The sooner Tim Cook is gone, the better.

He is the worst thing to have happened to Apple. We are in danger of a redux of the disaster that happened at Apple after Jobs was first ousted.

If nothing is done to reverse this, I think Apple would become like Microsoft or Dell and become irrelevant in a couple of years time like BlackBerry.

LOL! Your knowledge and understanding of American Capitalism is, ahhhh, interesting.

 

[mlmwalt]

As a stockholder I'm in favor of a buyback, not an increased dividend. I have no problem with Icahn or any other investor making that suggestion. The stock is undervalued, clearly, due to manipulation by so-called analysts, who among other things drove down AAPL after AAPL had a record-breaking quarter. Remember that? Apple should be buying up as much stock as they can, because Apple will continue to have increased success, and the value of the company will only rise. Apple should definitely do it now, before they introduce another new product line, and if they can pull off another low-interest borrowing scheme to do it, that's even better. Apple can later sell stock to investors at a much higher price, if they ever need to, which is better than holding onto a cash heap earning pitiful interest.

It's good for the long term health of the company. Icahn conspiracy theorists need to understand that what he's advising is good for the long term for Apple at the same time it's good short term for investors. That's win-win, in my book.

I'm on board with the buyback too, I'm not on board with Icahn getting insider information and exerting force that is only in his interest. I know it's naive to even consider that he doesn't anyway, but it just rubs me that I've probably been a shareholder longer than him and I have more of my worth invested than he does.

 

[Apple Corps]

It does result in increased EPS, which will result in a higher stock price, provided the multiples hold up.

IJ - I understand that "theory". However, in the recent "real world" Apple has spent billions in share buybacks and the chaos / manipulation / whatever of the market has resulted in negative financial leverage.

Let's say I own 2000 shares. $50 billion divided by 950 million shares would yield a dividend of $52/share. That $52 times my 2000 shares = $104,000 dividend payment to me. Cold, hard real currency and I still own my 2000 shares.

That same $50 billion spent buying back shares has netted me - well, not much.

 

[IJ Reilly]

IJ - I understand that "theory". However, in the recent "real world" Apple has spent billions in share buybacks and the chaos / manipulation / whatever of the market has resulted in negative financial leverage.

Let's say I own 2000 shares. $50 billion divided by 950 million shares would yield a dividend of $52/share. That $52 times my 2000 shares = $104,000 dividend payment to me. Cold, hard real currency and I still own my 2000 shares.

That same $50 billion spent buying back shares has netted me - well, not much.

Granted it is only one of several variables governing stock prices, but it is also safe to say that, all other things being equal, a smaller float results in a higher EPS and therefore a higher price for the stock. Of course all things never are equal and in general I prefer the cash, too.

 

[SeattleMoose]

A vague and generic explanation, consequently, totally unpersuasive.

And your argument is any more persuasive ..... because???.... crickets.

 

[macs4nw]

Depends on how much poison is in it?

+1 The most clever post so far! Did everyone get that? I can only believe that those on here who so fervently defend greedy vultures, must be stock manipulators, or wannabes themselves.

Investing in the stock market for profit = OK. (the American dream, in fact)

Unconscionably manipulating the stock market for personal profit, without any regard for the outcome for other investors, individuals or companies = detestable, loathsome, lurid, disgusting, scandalous, shameful, contemptible, odious, repugnant, sleazy, pick your adjective, you get what I'm saying. And in saying this, I admit that sometimes it is a fine line separating the two, but there is a line nevertheless; a line that many people would hesitate to cross.

Greed is a human attribute, we all have it to some degree; unbridled, obscene greed with zero regard for one's fellow human beings is to be looked down upon for the despicable, heinous behavior it is. Just my .02

 

[MacSince1990]

Yep, because Tim Cook is not interested in your opinion on financial matters. Carl Icahn is a financial legend. Regardless of if he was a shareholder or not, Cook would presumably find time to have a lunch with him.

No, Carl Icahn is a notorious financial assclown. There's a difference. He puts the 'douche' in "fiduciary".

Over the years folks have suggested to Apple that they do buy backs and dividends. They have continually failed to do so at a level to stop or reverse the cash pile accumulation. Now this is a fantastic problem to have. But Apple and its Shareholders could have done better than sit around with that cash pile earning 1% returns.

Apple is entitled to do whatever the hell it pleases with its stock.

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Did you just pull that number out of your ass? Are you suggesting that Apple is currently overvalued by 40-60%, based on the current price of $486? You must be selling short short, right?

The price of any stock is relatively arbitrary. It's what people (and to a small extent, random freaking chance) decide a stock is worth. Look at Chipotle.. then look at Microsoft :/

 

[TallManNY]

No, Carl Icahn is a notorious financial assclown. There's a difference. He puts the 'douche' in "fiduciary".



Apple is entitled to do whatever the hell it pleases with its stock.

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The price of any stock is relatively arbitrary. It's what people (and to a small extent, random freaking chance) decide a stock is worth. Look at Chipotle.. then look at Microsoft :/

Yes, but just because they have a right to do with it as they please (subject to their fiduciary duty to the shareholders), that doesn't mean they can't be second guessed. Companies sometimes do bad things with their cash (see most of Microsoft's recent acquisitions). Apple has done nothing productive with many billions of dollars now for the last four or so years. (Note I'm not saying they haven't done productive stuff with lots of their money, just that many billions have just sat around.) Personally, I think they are going to announce a huge quarter at the end of the month and that the cash pile has grown again. This is a great problem to have, but it isn't ideal for shareholders who want to own Apple that they have to also buy a share in $150 billion of low return investments.

 

[Spacial]

I wonder if they will talk about the headlines of the last two days as they apply to iOS 7 making people sick. I would think Sir Ive could do better than this.


http://www.huffingtonpost.com/2013/09/26/ios-7-design-motion-sickness_n_3995898.html?ir=Technology

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http://www.google.com/url?q=http://...cQFjAE&usg=AFQjCNFZi58kZmiAuTTPgLHs2MEidK4Dkw

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http://www.fastcompany.com/3018636/fast-feed/ios-7-is-reportedly-making-people-sick

 

[lildimsum7]

It does result in increased EPS, which will result in a higher stock price, provided the multiples hold up.

IJ - I understand that "theory". However, in the recent "real world" Apple has spent billions in share buybacks and the chaos / manipulation / whatever of the market has resulted in negative financial leverage.

Let's say I own 2000 shares. $50 billion divided by 950 million shares would yield a dividend of $52/share. That $52 times my 2000 shares = $104,000 dividend payment to me. Cold, hard real currency and I still own my 2000 shares.

That same $50 billion spent buying back shares has netted me - well, not much.

I think buybacks are a better way of capital allocation overall, but it all depends on price. Weight Watchers was really stupid with its buyback program, and it backfired. At least Apple has a smart investor advising on buybacks. If Apple buys stock at a price they think is below intrinsic value, then they can buy back a greater amount of shares than if the price were much higher. Dividends aren't tax efficient for all shareholders. With buybacks, shareholders don't pay tax.

If you wanna learn more about buybacks, there's a big research paper somewhere around the Internet. I think i got it from csinvesting.

 

[Apple Corps]

I think buybacks are a better way of capital allocation overall, but it all depends on price. Weight Watchers was really stupid with its buyback program, and it backfired. At least Apple has a smart investor advising on buybacks. If Apple buys stock at a price they think is below intrinsic value, then they can buy back a greater amount of shares than if the price were much higher. Dividends aren't tax efficient for all shareholders. With buybacks, shareholders don't pay tax.

If you wanna learn more about buybacks, there's a big research paper somewhere around the Internet. I think i got it from csinvesting.

The tax efficiency is a very small potatoes issue - I'd much rather be paying higher taxes on a large dividend "gain" than no taxes on capital appreciation that is NOT happening. The market continues to trash AAPL and undervalue it so much for so long that buyback $$ (from a shareholder perspective) are wasted. It is a theory that simply has not been working for AAPL.

 

[lildimsum7]

The tax efficiency is a very small potatoes issue - I'd much rather be paying higher taxes on a large dividend "gain" than no taxes on capital appreciation that is NOT happening. The market continues to trash AAPL and undervalue it so much for so long that buyback $$ (from a shareholder perspective) are wasted. It is a theory that simply has not been working for AAPL.

If Apple keeps getting more undervalued like you say, then they'll buy back more shares, which is great for shareholders! How could you predict market behavior? Don't kid yourself. Institutional ownership is at 61%. The way I see it, if Apple has $150/sh in excess cash, and if earnings are in-line, investors would become more confident and AAPL would trade closer to fair value. Markets have always been this way. That's why value investing has always worked.

 

[Apple Corps]

If Apple keeps getting more undervalued like you say, then they'll buy back more shares, which is great for shareholders! How could you predict market behavior? Don't kid yourself. Institutional ownership is at 61%. The way I see it, if Apple has $150/sh in excess cash, and if earnings are in-line, investors would become more confident and AAPL would trade closer to fair value. Markets have always been this way. That's why value investing has always worked.

From a shareholder perspective - give me the damn cash via one or several exceptional dividend payments. I don't want to risk that cash to the market vagaries.